OIL AND GAS

President Zuma, please don't sign

For those of us who have been following the progress of the MPRDA Bill as it tumbles towards promulgation, we have repeatedly felt twinges of indignation and disbelief occasioned by the paucity of respect-worthy drafting.

Similarly, the unashamedly partisan politics that have cleared the path towards approval thereof should be a thorn in the side of any person who maintains a basic appreciation of the rule of law. As the famous historian, Niall Ferguson, has noted: “The rule of law has many enemies. One of them is bad law.”

It is not that we should distrust anything that at first glance outrages reason by seemingly contradicting international best practice. We cannot understand what is wrong without lifting the lid and looking inside. However, we have not just had a peek, we’ve gazed and closely observed the MPRDA and the Bill relating thereto. A failure to identify the issues is, however, not the point in issue. It is not that the interested parties have not raised their hands and asked tough questions of the policy-makers. The problem is that, after participating via all the predetermined channels, we are suddenly no longer immune to the lure of letting things slide. We are too often reconciled to living with legislative offerings that rise only to flop. If after consideration and reflection, draft laws fail to display anything but unforced lucidity, it is then that we must, with conviction and a fair dose of indignation, repeatedly raise our hands and our voices. The cognitive elite must not whimper in public so as to appease the political elite, yet roar in private to appease their shareholders. The industry is all too willing to proclaim its rectitude at only a handful of public participation-related occasions and then to wallow in the bile that follows not biting the hand that beats it.

As a product of legislative drafting, the MPRDA has, for far too long, fallen short of being able to garner respect of the jurisprudential sort. The Bill is not the legislator’s first cut at rectifying this situation. There have been previous attempts but, as with the current attempt, all have fallen short of first prize, namely, removal of oil and gas out from under the legislative deadweight that is the MPRDA. Instead of removing oil and gas out from under the MPRDA, the Bill only serves to further butcher the law. The drafters of the Bill would have us believe that the proposed amendments are the product of post-consultation drafting that have been considered and inserted with surgical precision. This is a difficult proposal to stomach because it is far more likely that the Bill will leave the MPRDA out of step with best practice, such that our industry will be hobbled and forced to limp along behind other African jurisdictions that have shown resource-related promise and whose governments have had the gumption to provide legal frameworks that are modern, competitive and jurisprudentially sound.

If President Zuma elects to sign the Bill into law, bad law will be born and a suboptimal legislative framework will continue to plague a promising industry.It is perhaps trite to state that economic growth is to a large degree the result of laws and that the devil in any legislative development lies in the text. The oil and gas industry’s lobbyists have read the text and submitted their comments. Their actions have, however, seemingly been interpreted by the legislative drafters as the proverbial ticking of a box so that it can be claimed that interested and affected parties have acquiesced to whatever product the drafters may ultimately produce. As harsh as this commentary is, it must be born in mind that the objective hereof is to spread the fact that, not only does the Bill possess an inherent inability to bring about an inspiring new dawn to the South African oil and gas industry, this problem is not some minor perturbation. We are en route to inheriting a dimmer future in that that which we are being offered is merely echoing repetitions of outdated jurisprudence. Anyone who is relatively au fait with the news will know that the supposed benefits of these archaic legal stylings are trumpeted by means of reactionary departmental media releases wherein overly-sensitive persons responsible for policy development miss the point such that adherents to the Maharaj School of Spin could well be screaming for tutelage.

The Department would like us to see the oil and gas aspects of the Bill in the same light as they do, thus as something that can be panel-beaten into shape through ad hoc amendments, not something that ought to be separated from the MPDRA. This is too parochial a view and one that must be tackled. Unfortunately, there is no painless explanation for the profusion of bad law that confronts us and threatens to retard the development of our economy. All law designed by committee is certainly going to lead to some unhappiness and regulatory hiccups, but nothing comes close to the MPRDA Bill as an example of drafters vainly trying to square the circle. The development of laws is in many ways a process of untidy mutation rather than the clinical process that our lawyerly vanity may wish it to be. There is, however, a line that must be drawn between wishful thinking and appropriate action. As it stands, the Bill has clearly ridden roughshod over the protestations of many affected parties, and South Africans are on the verge of being saddled with a legislative liability that will take effort and resources to rectify and, ultimately, rescind. How much contortion is required to manipulate the MPRDA so that fits with international best practice? How much self-respect on the part of the industry and its lawyers must be sacrificed in order that the State may pass legislation that we know to be poor?

When discussing the Bill, let us not mislead the policy-makers by offering hollow phrases filled with gentlemanly criticism. Let us be clear. We are currently confronted by a Bill that is an example of the insidious process whereby bad laws are gradually getting worse. We must be actuated by the fear that such laws may have dangerous economic consequences. We must remind our government that our laws should be aimed at expanding our economic opportunities, not constraining them.

Compare the Bill with another legislative possibility, namely, the creation of an industry-specific statute that wipes clean the legislative and regulatory slate and takes profound cognisance the mountain of international best practice that underpins lex petrolea. With great conviction, it can be argued that, when compared to the Bill, this alternative would occasion a fundamentally different economic and, concomitantly, political trajectory. What is the incentive that must be provided for our policy makers to favour this option? Arguably, approaching the courts is an ex post facto mechanism that is certainly more uncomfortable than another option which is to step on the toes of the policy makers before they fulfil their mandate.

If one considers the evolutionary narrative of the Bill, it evidences the existence of a government that is inappropriately responsive to jurisprudential shifts no matter how politely the industry highlights them. Moreover, the history of the Bill demonstrates a propensity on the part of industry not to step up to (and beyond) the plate, nor onto the toes that it ought to. The Bill is not some benign development that should be allowed to pass unchallenged. There will be ever increasing inter-generational transfers of unemployment-related frustration if the oil and gas industry is not welcomed by appropriate laws in an environment where skills transfer and employment can flourish. Even those that are not well-versed in the Bill’s evolution possess an inchoate notion that there is an institutional malaise amongst the policy-makers which threatens to negatively affect their futures. Hand-in-hand with this malaise is a pervasive anxiety relating to the impending presidential signature of the Bill. Bearing in mind the inter-generational implications of the current legislative path, and the argument that South Africa could benefit from wholesale reform of the MPRDA, we are fast-approaching a legislative cliff and President Zuma’s signature may well push us over the edge. We are in the endgame of the legislative changes in question and the time for gentlemanly tête-à-têtes is over. Let’s be unambiguously clear (failing which we will be stuck looking for suitable palliatives), the balance of opinion favours the proposal that the Bill is a legislative change that should not come to fruition. Let it not be said that Karl Kraus's statement about psycho-analysis was not aimed at the Bill, namely: that it was the disease of which it pretended to be the cure.